3/7/20-year BTP

Italy will come to the market this morning to sell up to E7.75bln of 3/7/20-year BTPs.

• 0% Apr-24 BTP: E3.0-3.5bln of the 3-year BTP will be on offer, a slightly larger auction than the last auction which saw E3.0bln sold. Demand for the 0% Apr-24 has remained consistent with bid-to-covers remaining around the 1.4x area. Prevailing yields at the time of writing were over 15bp lower than the -0.06% seen at the May auction, more in line with the -0.22% seen at the March launch. We expect a similar 1.4x bid-to-cover at today's auction.
• 0.50% Jul-28 BTP: The 7-year BTP was launched last month for E4.5bln, although only E2.0-2.5bln is on offer today. The launch saw a bid-to-cover of 1.35x, a bit lower than the 1.43-1.53 range seen for the 0.25% Mar-28 BTP between January and March (although some of the demand may have been taken by the E7bln syndication for the prior benchmark in April). Like the 3-year, yields have fallen notably since the May auction, almost 25bp in the case of the 0.50% Jul-28 BTP.
• 1.80% Mar-41 BTP: The 20-year BTP was launched via syndication in September for E10bln (books E83.5bln) before being reopened in February for E2bln (BTC: 1.27x) and May for E4.5bln (BTC: 1.35x). Today's auction of E1.25-1.75bln is considerably smaller than last month and we would expect a strong bid-to-cover in spite of the 10-year syndication held Tuesday and this afternoon's ECB policy announcement.